(Corrects to remove references to Brexit vote in first and 9th
paragraphs; corrects syntax in 2nd paragraph)
* NSE index down 1.5 pct, BSE index 1.4 pct lower
* NSE volatility index hits one-month high
* Banks lead falls; Welspun India plunges
Sept 12 Indian shares fell nearly 2 percent on
Monday, posting their biggest intraday percentage drop since
June 24, in a global selloff on renewed talks that the U.S.
Federal Reserve might be serious about raising interest rates as
early as next week.
Also weighing on sentiment were reports that the Bank of
Japan was considering ways to steepen the Japanese yield curve,
along with worries that central banks more generally were
running short of fresh stimulus options.
Reflecting the caution, Asian shares suffered their sharpest
setback since June with MSCI's broadest index of Asia-Pacific
shares outside Japan falling 2.2 percent,
pulling away from a 13-month peak hit last week.
Some Fed officials have been trying to convince markets that
the September meeting would be "live" for a hike, even though
futures <0#FF:> only imply a one-in-four chance of a move.
"The main trigger for today's fall comes from the Fed
comments made on Friday on the increased probability of a rate
hike. Markets also remain heated from last week's reports of a
nuclear test in North Korea," said Neeraj Dewan, director at
Quantum Securities, adding that he expected the market
volatility to continue until the Fed decision.
The NSE volatility index, a key gauge to measure
investors' fear, rose as much as 13.9 percent to its highest
since Aug. 10.
Investors also await the August consumer price inflation
data expected later in the day for clues about the economy.
The broader NSE index was down 1.5 percent at
8,734.6 as of 0623 GMT after declining as much as 1.89 percent
earlier in the day, while the benchmark BSE index was
1.4 percent lower at 28,393.9 after shedding up to 1.9 percent.
Both the indexes posted their worst intraday fall since June
Indian stock markets will be closed on Sept. 13 for a public
Banking shares took the maximum hit with the Nifty bank
index among the leading losers, posting its biggest
intraday percentage fall since June 24. The sector had gained
about 5.5 percent in the last two weeks.
Among banks, State Bank of India fell 2.6 percent,
Punjab National Bank declined 2.6 percent and ICICI
Bank dropped 3.3 percent.
Welspun India fell as much as 4.9 percent after
U.S. retailer Wal-Mart said it stopped selling the
Indian firm's Egyptian cotton products as it was unable to
assure them the products were authentic.
Tata Steel Ltd fell 3.7 percent ahead of its
June-quarter results later in the day.
(Reporting by Samantha Kareen Nair in Bengaluru; Editing by